Eight Dividend Stocks to Buy Now

For dividend stock investors looking for regular paydays to add to their retirement funds, things have finally started to look up in 2010. High-yield dividend stocks are back in favor as companies add to their payouts and investors look for low-risk ways to supplement their retirement investment funds. Dividend stocks with high yields offer stability as well as a regular payout, making them the perfect investing strategy right now.

As we reported in April, dividend stocks are increasing payouts across the board, from high-yield dividend aristocrats to up-and-comers. In the first quarter alone, dividend stocks added more than $6 billion in an effort to make back some of the ground lost by cuts and cancellations from the high-yield heyday before the financial crisis. Dividends have been making a comeback, with 284 companies raising them in the first quarter, up 47% from a year earlier, according to Standard & Poor's.

Simple trading strategies are often the best, and relying on a regular dividend payout to offset volatility makes a lot of sense in the current stock market. And best of all, whether you're a growth investor who's focused on stocks increasing earnings and sales or a value investor focused on price-to-earnings ratios or oversold bargains, high-yield dividend stocks can easily be worked into your strategy without changing your core investment tactics.

So where do you find high-yield dividend stocks or reliable companies that will keep paying you quarter after quarter? First of all, keep in mind that previous dividend payouts are no guarantee of continued success. And many financial Web sites artificially inflate a stock's dividend yield by annualizing previous payouts and not looking to the future. To safeguard your dividends and ensure your retirement funds keep seeing that regular trickle of money, it's a good idea to focus on companies that are raising their dividends right now and have a small window left before the next payout.

The dividend increase will require Target to pony up an additional $235.7 million a year to pay shareholders, but that's a drop in the bucket for the retailer with a $40 billion market cap. Target is also reasonably priced, with a PE ratio of 15. Most importantly, the recent dividend increase for Target will take affect in its next payout in September, meaning any investor who buys in before the ex-dividend date of Aug. 18 will share in the payday.

In Target's case, the dividend increase -- coupled with the recent resumption of its $10 billion stock-buyback plan -- also comes as the company is slowing its store growth, a key focus of cash in years past. Target said in January it was putting the brakes on store expansion and would instead spend $1 billion this year on remodeling. Target, which has seen sales rebound some after weakness in 2008 and 2009, plans to open fewer than 10 stores this year, compared with nearly 60 in 2009 and a past annual average of nearly 100.

During the recession, Target put more emphasis on advertising its competitive prices on basics. It also began adding more groceries to its discount stores to increase customer visits and prompt shoppers to buy more high-margin items across the store -- a strategy that resulted in a 2.2% increase in shopper visits in the latest quarter.

Caterpillar is the world's largest manufacturer of construction and mining equipment. Based on current pricing, its stock has a dividend yield of about 3%. But that didn't stop Caterpillar from raising the company's quarterly dividend another 5% at the shareholder meeting last week. The company said the quarterly dividend of 44 cents, up from 42 cents, will be payable in August to investors who buy in before July 20.

Caterpillar earnings have been improving, and the stock has added about 13% year to date despite the broader market moving pretty much sideways. Upbeat comments about the U.S. economy from Federal Reserve Chairman Ben Bernanke recently, as well as favorable Chinese export data, seem to be indicating global economic recovery and hence stronger demand for Caterpillar gear.

Unlike Target and Caterpillar, which have been dividend stocks for some time, Viacom made a splash last week with its first-ever dividend announcement. The company will also be resuming its stock buyback program, which was halted in early 2009 amid the financial crisis. The 15-cent quarterly dividend, payable July 1 to shareholders of record by June 17 (that's today!) will cost Viacom about $365 million a year.

Some are worried this may mean the end of growth for Viacom, as the company has struggled since splitting from CBS ( CBS) in 2006. And subsidiary Paramount has been suffering because Shrek movie sales haven't been all that great. But Viacom Class B shares are up 25% so far this year, so this new member of the dividend stock army must be doing something right.

American Eagle Outfitters offers a high dividend yield for a small-cap retail stock, with more than 3% of the company's share price coming back to stockholders via annual payouts. American Eagle just upped the ante even more, raising its quarterly dividend 10% to 11 cents a share, saying the increase reflects its strong cash generation. The teen retail stock also repurchased 5.9 million shares for about $96 million.

If you want to share in this high-yield dividend retailer, make sure you buy in to AEO stock before the ex-dividend date of July 8. American Eagle has tumbled about 20% so far this year, with much of that loss coming after an analyst at MKM Partners downgraded the stock from "Buy" to "Neutral" on May 26. Caris & Co also downgraded the company's share to "Above Average" from "Buy" on June 1. But with a price-to-earnings ratio of around 17, the stock may be a decent bargain buy. American Eagle sales have also shown strength earlier in the year, so there may be hope yet for AEO stock.

Just two days ago, absorbent product maker Oil-Dri said it was raising its quarterly dividend by a penny to 16 cents a share. The dividend will be payable on Sept. 3 to stockholders of record on Aug. 20. Also worth noting is that the company continues to set new 52-week highs and has soared 45% so far in 2010.

ODC is a micro-cap stock with a market cap of about $160 million, so make sure you protect yourself with a limit order if you're looking to buy this dividend investment. Despite its small size, the high dividend yield of more than 3% makes Oil-Dri a decent income investment for your retirement money if you want to spice up your portfolio with smaller, aggressive picks. And here's a bit of trivia for you: Besides making absorbent products for the industrial, automotive and agricultural industries, Oil-Dri is the world's largest manufacturer or cat litter.

Also on Tuesday, dividend stock Heico marked its 64th consecutive boost to its semiannual dividend. Take note: Unlike many companies that offer a quarterly payout, Heico only pays its dividend twice a year. Though the company doesn't exactly have a high dividend yield with its 0.3% payday, it's still worth noting that the company has a very consistent dividend history.

The regular semiannual cash dividend of 6 cents is payable on July 21 to shareholders of record as of July 7. This is a 25% boost over the company's previous dividend rate of 4.8 cents a share.

So what does Heico do? The company is an electronics component manufacturer engaged primarily with niche segments of the aerospace and defense industry, as well as medical, telecommunication and electronics companies. This diverse customer base provides a reliable cash flow that is partly responsible for the more than six decades of dividend increases for this stock.

Casey's General Stores also announced on Tuesday it would increase its dividend payment by 18% to 10 cents per share. The dividend is payable Aug. 16 to shareholders of record on Aug. 2. The move came amid a fairly impressive earnings report for the retailer.

Specifically, Casey's reported net earnings of $116.9 million for the fiscal year that ended April 30 on sales of $4.6 billion. The EPS of 43 cents per share exceeded analyst estimates. Looking forward, the company said it intends to grow its store locations by 4% to 6% in fiscal 2011, replace 20 stores and complete 20 remodels. Casey's currently operates 1,500 convenience stores in nine Midwest states. Though not a high-yield dividend stock, it's 1.2% payday is noteworthy for retirement investors looking for regular disbursements.

C.R. Bard announced last week that it raised the quarterly dividend for its shareholders 6% to 18 cents a share. BCR stock will also be part of a new buyback program worth about $500 million. The medical device maker made its next dividend payable Aug. 6 to shareholders of record as of July 26.

C.R. Bard has a respectable dividend yield of about 0.9%, and the stock is up about 4% year to date, so this isn't exactly a homerun. But dividend stock investors should take notice of the recent increase to C.R. Bard's yield.

At the time of publication, Reeves had no positions in stocks mentioned.